U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(MARK ONE)
|X| Quarterly Report Pursuant to Section 13 or 15(d) of Securities Exchange
Act of 1934
For the quarterly period ended September 30, 2002
|_| Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from _______ to _______.
Commission File No. 000-28321
AVID SPORTSWEAR & GOLF CORP.
(Name of Small Business Issuer in Its Charter)
Nevada 88-0374969
- ------ ----------
(State or Other Jurisdiction of I.R.S. Employer Identification No.)
Incorporation or Organization)
834 Ridge Avenue, Pittsburgh, Pennsylvania 15212
- ------------------------------------------ -----
(Address of Principal Executive Offices) (Zip Code)
(412) 321-6001
--------------
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months, and (2) has
been subject to such filing requirements for the past 90 days. Yes |X| No |_|
There were 147,933,309 shares of Common Stock outstanding as of December
10, 2002. This number does not include outstanding options to purchase shares of
Common Stock of the issuer.
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
--------------------
2
AVID SPORTSWEAR & GOLF CORP.
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2002 AND DECEMBER 31, 2001
3
AVID SPORTSWEAR & GOLF CORP.
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
------
SEPTEMBER 30, DECEMBER 31,
2002 2001
--------------- -------------
(UNAUDITED)
CURRENT ASSETS
Cash $ 15,381 $ 213,434
Accounts receivable, net - 810,187
Note receivable - 300,000
--------------- -------------
Total Current Assets 15,381 1,323,621
--------------- -------------
OTHER ASSETS
Deposits - 150,000
Trademarks 2,902 2,902
--------------- -------------
Total Other Assets 2,902 152,902
--------------- -------------
TOTAL ASSETS $18,283 $1,476,523
=============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 4,067,514 $ 4,077,515
Accrued liabilities 182,531 228,312
Notes payable 561,525 561,525
Capital leases - current portion 131,629 131,629
Equity option and warranty liability 1,164 1,948
--------------- -------------
Total Current Liabilities 4,944,363 5,000,929
--------------- -------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock; $0.001 par value: 10,000,000 shares authorized; 5,000 and -0- shares 5 -
issued and outstanding, respectively
Common stock; $0.001 par value; 150,000,000 shares authorized; 147,933,309 and 147,933 147,933
147,933,309 shares issued and outstanding, respectively
Additional paid-in capital 16,760,584 16,740,589
Accumulated deficit prior to the development stage (20,412,928) (20,412,928)
Accumulated deficit during the development stage (1,421,674) -
--------------- -------------
Total Stockholders' Equity (Deficit) (4,926,080) (3,524,406)
--------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 18,283 $ 1,476,523
=============== =============
The accompanying notes are an integral part of these consolidated financial statements.
4
AVID SPORTSWEAR & GOLF CORP.
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
FROM INCEPTION
OF THE
DEVELOPMENT
STAGE
ON
JANUARY 1, 2002
FOR THE THREE MONTHS FOR THE NINE MONTHS THROUGH
ENDED ENDED SEPTEMBER 30,
SEPTEMBER 30, SEPTEMBER 30, 2002
--------------------------------- --------------------------------- ---------------
2002 2001 2002 2001 2002
--------------- ---------------- --------------- ---------------- ---------------
REVENUES $ $ $ $ $ -
EXPENSES
Bad debt - - 960,187 - 960,187
General and administrative 44,961 - 511,699 - 511,699
--------------- ---------------- --------------- ---------------- ---------------
Total Expenses 44,961 - 1,471,886 - 1,471,886
--------------- ---------------- --------------- ---------------- ---------------
LOSS FROM OPERATIONS (44,961) - (1,471,886) - (1,471,886)
--------------- ---------------- --------------- ---------------- ---------------
OTHER (EXPENSE) INCOME
Other Income 53 - 59,153 - 59,153
Interest expense (14,038) - (42,114) - (42,114)
Gain on settlement of debt - - 32,388 - 32,388
Income (loss) on equity options
and warrants (661) - 785 - 785
--------------- ---------------- --------------- ---------------- ---------------
Total Other (Expense) Income (14,646) - 50,212 - 50,212
--------------- ---------------- --------------- ---------------- ---------------
LOSS BEFORE DISCONTINUED OPERATIONS (59,607) - (1,421,674) - (1,421,674)
--------------- ---------------- --------------- ---------------- ---------------
DISCONTINUED OPERATIONS - (2,725,480) - (5,390,045) -
--------------- ---------------- --------------- ---------------- ---------------
INCOME TAX EXPENSE - - - - -
NET LOSS $ (59,607) $(2,725,480) $ (1,421,674) $ (5,390,045) $ (1,421,674)
=============== ================ =============== ================ ===============
BASIC LOSS PER SHARE $ (0.00) $(0.02) $ (0.01) $ (0.05)
=============== ================ =============== ================
WEIGHTED AVERAGE NUMBER OF SHARES 147,933,309 144,270,305 147,933,309 102,383,608
=============== ================ =============== ================
The accompanying notes are an integral part of these consolidated financial statements.
5
AVID SPORTSWEAR & GOLF CORP.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
PREFERRED STOCK COMMON STOCK ADDITIONAL
--------------------- ------------------------ PAID-IN SUBSCRIPTIONS ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE DEFICIT
--------- --------- ---------- ---------- ----------- ------------- -------------
Balance, December 31, 2000 - $ -- 46,429,406 $ 46,429 $13,855,035 $(942,000) $(14,224,689)
January 10, 2001, common
stock issued for
conversion of debt,
non-related, valued at
$0.06 per share - - 133,333 133 7,867 - -
January 10, 2001, common
stock issued for
conversion of debt,
non-related valued at
$0.07 per share - - 241,176 241 16,159 - -
January 19, 2001, common
stock issued for
conversion of debt,
non-related, valued at
$0.05 per share - - 360,000 360 17,640 - -
January 23, 2001, common
stock issued for
conversion of debt,
non-related, valued at
$0.05 per share - - 1,612,000 1,612 78,988 - -
January 29, 2001, common
stock issued for
conversion of debt,
non-related, valued at
$0.05 per share - - 190,000 190 9,310 - -
January 30, 2001, common
stock issued to a related
party for conversion of debt,
non-related, valued
at $0.75 per share - - 11,500,000 11,500 851,000 - -
January 30, 2001, cancelled
common stock issued for
services, valued at $0.30
per share - - (1,200,000) (1,200) 1,200 - -
February 5, 2001, common
stock issued for
conversion of debt,
non-related, valued at
$0.05 per share - - 82,000 82 4,018 - -
February 7, 2001, common
stock issued for
conversion of debt,
non-related, valued at
$0.05 per share - - 612,000 612 29,988 - -
--------- --------- ---------- ---------- ----------- ------------- -------------
Balance Forward - $ - 59,959,915 $ 59,959 $14,871,205 $(942,000) $(14,224,689)
--------- --------- ---------- ---------- ----------- ------------- -------------
The accompanying notes are an integral part of these consolidated financial statements.
6
AVID SPORTSWEAR & GOLF CORP.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
PREFERRED STOCK COMMON STOCK ADDITIONAL
------------------- ------------------------ PAID-IN SUBSCRIPTIONS ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE DEFICIT
--------- -------- ---------- ---------- ----------- ------------- -------------
Balance Forward - $ - 59,959,915 $ 59,959 $14,871,205 $ (942,000) $(14,224,689)
February 12, 2001, common
stock issued for
conversion of debt,
non-related, valued at
$0.05 per share - - 200,000 200 9,800 - -
February 12, 2001, common
stock issued for
conversion of interest,
non-related, valued at
$0.05 per share - - 11,078 11 554 - -
February 19, 2001, issued
common stock, valued at
$0.08 per share, to related
party for conversion of
debt - - 2,310,547 2,311 182,533 - -
February 19, 2001, commons
tock issued for Conversion
of interest, non-related,
valued at $0.09 per share - - 425,939 426 37,909 - -
February 22, 2001, common
stock issued for
Conversion of debt,
non-related, valued at
$0.06 per share - - 45,775 46 2,554 - -
February 22, 2001, common
stock issued for
conversion of debt,
non-related, valued at
$0.06 per share - - 200,000 200 11,000 - -
February 28, 2001, common
stock issued for
conversion of debt,
non-related, valued at
$0.05 per share - - 360,769 361 17,839 - -
March 8, 2001, common stock
issued for conversion of
debt, non-related valued
at $0.05 per share - - 375,000 375 17,625 - -
March 8, 2001, common stock
issued for conversion of
interest, non-related, at
$0.08 per share - - 20,679 21 972 - -
March 13, 2001, common stock
issued for cash,
non-related, valued at
$0.05 per share - - 4,000,000 4,000 196,000 (200,000) -
--------- -------- ---------- ---------- ----------- ------------- -------------
Balance Forward - $ - 67,909,702 $ 67,910 $15,347,991 $(1,142,000) $(14,224,689)
--------- -------- ---------- ---------- ----------- ------------- -------------
The accompanying notes are an integral part of these consolidated financial statements.
7
AVID SPORTSWEAR & GOLF CORP.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
PREFERRED STOCK COMMON STOCK ADDITIONAL
--------------------- ------------------------ PAID-IN SUBSCRIPTIONS ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE DEFICIT
--------- -------- ---------- ---------- ----------- ------------- -------------
Balance Forward - $ -- 67,909,702 $ 67,910 $15,347,991 $(1,142,000) $(14,224,689)
March 20, 2001, common stock
issued for conversion of
debt, non-related, valued
at $0.03 per share - - 176,300 176 5,324 - -
March 26, 2001, common stock
issued for conversion of
debt, non-related, valued
at $0.03 per share - - 857,142 857 23,143 - -
March 30, 2001, common stock
issued for cash,
non-related, valued at
$0.05 per share - - 2,000,000 2,000 98,000 (100,000) -
April 2, 2001, common stock
issued for conversion of
debt, valued at $0.03 per
share - - 2,260,713 2,261 61,039 - -
April 9, 2001, common stock
issued for conversion of
debt, non-related, valued
at $0.03 per share - - 1,607,141 1,607 43,393 - -
April 10, 2001, commons tock
issued for conversion of
debt, non-related, valued
at $0.03 per share - - 571,426 571 15,429 - -
April 17, 2001, common stock
issued for consulting
services, valued at $0.06
per share - - 125,000 125 7,375 - -
April 18, 2001, common stock
issued for conversion of
debt, non-related, valued
at $0.03 per share - - 2,000,000 2,000 54,000 - -
April 24, 2001, common stock
issued for conversion of
debt, non-related, valued
at $0.03 per share - - 1,406,250 1,406 43,594 - -
--------- -------- ---------- ---------- ----------- ------------- -------------
Balance Forward - $ -- 78,913,674 $ 78,913 $15,699,288 $(1,242,000) $(14,224,689)
--------- -------- ---------- ---------- ----------- ------------- -------------
The accompanying notes are an integral part of these consolidated financial statements.
8
AVID SPORTSWEAR & GOLF CORP.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
PREFERRED STOCK COMMON STOCK ADDITIONAL
--------------------- ------------------------ PAID-IN SUBSCRIPTIONS ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE DEFICIT
--------- -------- ---------- ---------- ----------- ------------- -------------
Balance Forward - $ - 78,913,674 $ 78,913 $15,699,288 $(1,242,000) $(14,224,689)
April 30, 2001, common stock
issued for conversion of
debt, non-related, valued
at $0.03 per share - - 164,474 165 4,835 - -
April 30, 2001, common stock
issued for conversion of
interest, non-related,
valued at $ 0.03 per share - - 129,922 130 3,508 - -
May 3, 2001, common stock
issued for conversion of
debt, non-related, valued
at $0.03 per share - - 2,434,207 2,434 71,566 - -
May 10, 2001, common stock
issued for cash,
non-related, valued at
$0.04 per share - - 3,000,000 3,000 147,000 (150,000) -
May 10, 2001, common stock
issued for cash,
non-related, valued at
$0.03 per share - - 7,500,000 7,500 232,500 (240,000) -
May 10, 2001, common stock
issued for cash,
non-related, valued at
$0.03 per share - - 1,000,000 1,000 30,200 (31,200) -
May 10, 2001, common stock
issued for consulting
services, valued at $0.03
per share - - 5,000,000 5,000 162,500 - -
May 11, 2001, common stock
issued for conversion of
debt, non-related, valued
at $0.03 per share - - 2,467,102 2,467 72,533 - -
May 18, 2001, common stock
issued for conversion of
debt, non-related, valued
at $0.03 per share - - 3,178,568 3,179 85,821 - -
May 22, 2001, common stock
issued for conversion of
debt, non-related, valued
at $0.01 per share - - 8,214,278 8,214 106,786 - -
--------- -------- ---------- ---------- ----------- ------------- -------------
Balance Forward - $ - 112,002,225 $ 112,002 $16,616,537 $(1,663,200) $(14,224,689)
--------- -------- ---------- ---------- ----------- ------------- -------------
The accompanying notes are an integral part of these consolidated financial statements.
9
AVID SPORTSWEAR & GOLF CORP.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
PREFERRED STOCK COMMON STOCK ADDITIONAL
--------------------- ------------------------ PAID-IN SUBSCRIPTIONS ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE DEFICIT
--------- -------- ----------- ---------- ----------- ------------- -------------
Balance Forward - $ -- 112,002,225 $ 112,002 $16,616,537 $(1,663,200) $(14,224,689)
May 22, 2001, common stock
issued for conversion of
interest, non-related,
valued at $0.03 per share - - 34,589 35 1,016 - -
May 22, 2001, common stock
issued for conversion of
interest, non-related,
valued at $0.03 per share - - 119,336 119 3,222 - -
May 24, 2001, common stock
issued for debt,
non-related, valued at
$0.01 per share - - 2,979,165 2,979 25,621 - -
May 31, 2001, common stock
issued for conversion of
debt, non-related, valued
at $0.01 per share - - 749,999 750 9,750 - -
June 1, 2001, common stock
issued for conversion of
debt, non-related, valued
at $0.01 per share - - 10,911,454 10,912 93,838 - -
June 4, 2001, common stock
issued for conversion of
debt, non-related, valued
at $0.01 per share - - 18,765,625 18,766 161,384 - -
June 4, 2001, common stock
issued for conversion of
interest, non-related,
valued at $0.01 per share - - 235,961 236 2,029 - -
June 12, 2001, common stock
issued for conversion of
interest, non-related,
valued at $0.01 per share - - 179,330 179 1,542 - -
June 12, 2001, common stock
issued for conversion of
interest, non-related,
valued at $0.01 per share - - 200,955 201 2,612 - -
--------- -------- ----------- ---------- ----------- ------------- -------------
Balance Forward - $ - 146,178,639 $ 146,179 $16,917,551 $(1,663,200) $(14,224,689)
--------- -------- ----------- ---------- ----------- ------------- -------------
The accompanying notes are an integral part of these consolidated financial statements.
10
AVID SPORTSWEAR & GOLF CORP.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
PREFERRED STOCK COMMON STOCK ADDITIONAL
--------------------- ------------------------ PAID-IN SUBSCRIPTIONS ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE DEFICIT
--------- -------- ----------- ---------- ----------- ------------- -------------
Balance Forward - $ - 146,178,639 $ 146,179 $16,917,551 $(1,663,200) $(14,224,689)
June 19, 2001, common stock
issued for conversion of
debt, non-related, valued
at $0.01 per share - - 1,136,363 1,136 8,864 - -
June 19, 2001, common stock
issued for conversion of
interest, non-related,
valued at $0.01 per share - - 18,307 18 143 - -
June 20, 2001, common stock
issued for consulting
services, valued at $0.03
per share - - (4,400,000) (4,400) (143,000) - -
July 19, 2001, common stock
issued for consulting
services, valued at $0.01
per share - - 5,000,000 5,000 45,000 - -
October 10, 2001, common
stock issued to employees
for services, valued at
$0.01 per share - - 1,000,000 1,000 10,000 - -
November 29, 2001,
cancellation of previously
recorded common stock
subscription receivable - - (1,000,000) (1,000) - 30,200 -
Cash received in exchange for
common stock subscriptions - - - - - 228,300 -
Write-off uncollectible
common stock subscriptions
receivable - - - - - 1,404,700 -
Discount on debentures issued
at less than market value - - - - 293,501 - -
Reclassification as a result
of a change in accounting
principle for outstanding
options and warrants - - - - (391,470) - -
--------- -------- ----------- ---------- ----------- ------------- -------------
Balance Forward - $ - 147,933,309 $ 147,933 $16,740,589 $ - $(14,224,689)
--------- -------- ----------- ---------- ----------- ------------- -------------
The accompanying notes are an integral part of these consolidated financial statements.
11
AVID SPORTSWEAR & GOLF CORP.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
PREFERRED STOCK COMMON STOCK ADDITIONAL
--------------------- ------------------------ PAID-IN SUBSCRIPTIONS ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE DEFICIT
--------- -------- ----------- ---------- ----------- ------------- -------------
Balance Forward - $ - 147,933,309 $147,933 $16,740,589 $ - $(14,224,689)
Net loss for the year ended
December 31, 2001 - - - - - - (6,188,239)
--------- -------- ----------- ---------- ----------- ------------- -------------
Balance at December 31, 2001 - - 147,933,309 $147,933 $16,740,589 $ - $(20,412,928)
May 30, 2002, preferred stock
issued for cash at $4.00
per share (unaudited) 5,000 5 - - 19,995 - -
Net loss for the nine months
ended September 30, 2002
(unaudited) - - - - - - (1,421,674)
--------- -------- ----------- ---------- ----------- ------------- -------------
Balance, September 30, 2002
(unaudited) 5,000 $ 5 147,933,309 $147,933 $16,760,584 $ - $(21,834,602)
========= ======== =========== ========== =========== ============ =============
Accumulated deficit incurred
prior to the development
stage $(20,412,928)
Accumulated deficit incurred
during the development stage (1,421,674)
-------------
Total Accumulated Deficit $(21,834,602)
=============
The accompanying notes are an integral part of these consolidated financial statements.
12
AVID SPORTSWEAR & GOLF CORP.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
FROM INCEPTION
OF THE
DEVELOPMENT
STAGE
FOR THE NINE MONTHS ON
ENDED JANUARY 1, 2002
SEPTEMBER 30, THROUGH
------------------------------ SEPTEMBER 30,
2002 2001 2002
------------ ------------ ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,421,674) $(5,390,045) $(1,421,674)
Adjustments to reconcile net loss to net cash used in operating
activities:
Bad debt 960,187 236,564 960,187
Depreciation and amortization - 2,298,930 -
Common stock issued for services - 77,600 -
Conversion of debt below market value - 234,631
Loss on impairment of fixed assets - 771,407 -
Changes in operating assets and liabilities accounts:
(Increase) in due from factor - 700,492 -
(Increase) in accounts receivable - (964,969) -
Decrease in inventory, net - 1,479,688 -
Decrease in other assets - 67,636 -
(Decrease) in accounts payable (10,001) (984,336) (10,001)
(Decrease) in other current liabilities (45,781) (770,700) (45,781)
------------ ------------ ---------------
Net Cash Used in Operating Activities (518,053) (2,243,102) (518,053)
------------ ------------ ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets - (14,854) -
Decrease in notes receivable 300,000 - 300,000
------------ ------------ ---------------
Net Cash Provided (Used) in Investing Activities 300,000 (14,854) 300,000
------------ ------------ ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash overdraft - (87,534) -
Proceeds from sale of preferred stock 20,000 - 20,000
Payments on notes payable - (100,000) -
Proceeds from related party notes payable - 364,981 -
Payments on related party notes payable - (433,896) -
Proceeds from convertible debentures - 874,000 -
Issuance of common stock for cash - 721,200 -
Proceeds from subscribed stock - 228,300 -
Write-off of stock subscription receivable - 717,450 -
Payments on capital leases - (30,549) -
Debt offering costs - 68,695 -
Net Cash Provided by Financing Activities 20,000 2,322,647 20,000
------------ ------------ ---------------
The accompanying notes are an integral part of these consolidated financial statements.
13
AVID SPORTSWEAR & GOLF CORP.
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
FROM INCEPTION
OF THE
DEVELOPMENT
STAGE
FOR THE NINE MONTHS ON
ENDED JANUARY 1, 2002
SEPTEMBER 30, THROUGH
------------------------------ SEPTEMBER 30,
2002 2001 2002
------------ ------------ ---------------
NET INCREASE (DECREASE) IN CASH (198,053) 64,691 (198,053)
CASH AT BEGINNING OF PERIOD 213,434 25,452 213,434
CASH AT END OF PERIOD $ 15,381 $ 90,143 $ 15,381
============ ============ ===============
CASH PAID FOR:
Interest $ - $ 18,546 $ -
Income tax $ - $ - $ -
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Issuance of common stock for debt $ - $ 1,818,768 $ -
Issuance of common stock for subscription $ - $ 721,200 $ -
Conversion of debt below market value $ - $ 234,631 $ -
Issuance of common stock for services $ - $ 77,600 $ -
The accompanying notes are an integral part of these consolidated financial statements.
14
AVID SPORTSWEAR & GOLF CORP.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2002 and December 31, 2001
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared by
the Company without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the consolidated financial position, results of operations and cash
flows at September 30, 2002, and 2001, and for all periods presented have
been made.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. It is
suggested that these condensed consolidated financial statements be read
in conjunction with the financial statements and notes thereto included in
the Company's December 31, 2001, audited consolidated financial
statements. The results of operations for the period ended September 30,
2002, are not necessarily indicative of the operating results for the year
ended December 31, 2002.
NOTE 2 - GOING CONCERN
The Company's consolidated financial statements are prepared using
generally accepted accounting principles applicable to a going concern,
which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, the Company has
generated significant losses from operations for the nine months ended
September 30, 2002, and has current liabilities in excess of current
assets at September 30, 2002. Additionally, the Company reentered the
development stage on January 1, 2002, because all operations, with the
exception of Vida, Inc., were discontinued as of November 30, 2001. See
Note 3.
Management believes that the company will be able to obtain a significant
ownership position in a worldwide license to manufacture and sell a world
recognized brand product in the immediate future. In management's opinion
the Company will need to raise capital to acquire the ownership position
in the desired license which is predicated on changing its capital
structure. The changing of the capital structure will require shareholder
approval, which management believes will be granted in the near future.
There are no assurances that the Company will be able to raise the capital
required or obtain shareholder approval for the change in capital
structure.
NOTE 3- DISCONTINUED OPERATIONS
Effective November 30, 2001, the Company ceased operations relating to the
manufacture and sale of golf wear related products. This discontinuation
of operations included all operations of the company and its subsidiaries
with the exception of Vida, Inc., which has continued to operate on a
limited basis. The financial statements have been retroactively restated
to reflect this event. No tax benefit has been attributed to the
discontinued operations. The Company was deemed to have reentered the
development stage on January 1, 2002.
15
AVID SPORTSWEAR & GOLF CORP.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2002 and December 31, 2001
NOTE 3- DISCONTINUED OPERATIONS (Continued)
The following is a summary of the loss from discontinued operations
resulting from the elimination of all operations, with the exception of Vida,
Inc.
FOR THE THREE FOR THE NINE
MONTHS MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- --------------
2001 2001
------------- --------------
SALES, NET $ 1,626,747 $ 19,614,710
------------- --------------
COSTS OF SALES 1,335,188 14,188,377
------------- --------------
GROSS MARGIN 291,559 5,426,333
------------- --------------
EXPENSES
Shipping expenses 55,298 256,446
Design expenses 7,471 158,271
Selling expenses 52,929 1,314,231
Depreciation and amortization 80,446 348,913
General and administrative 2,090,472 5,669,951
Loss on impairment of goodwill - 1,962,205
Loss on impairment of assets 771,407 771,407
------------- --------------
Total Operating Expense 3,058,023 10,481,424
------------- --------------
OPERATING LOSS (2,766,464) (5,055,091)
------------- --------------
OTHER INCOME (EXPENSE)
Interest expense (75,357) (490,790)
Interest income 116,341 155,836
------------- --------------
Total Other Income (Expense) 40,984 (334,954)
------------- --------------
NET LOSS FROM DISCONTINUED OPERATIONS $ (2,725,480) $ (5,390,045)
============== ==============
16
ITEM 2. MANAGEMENT'S PLAN OF OPERATION AND DISCUSSION AND ANALYSIS.
----------------------------------------------------------
INTRODUCTORY STATEMENTS
Forward-Looking Statements and Associated Risks. This filing contains
forward-looking statements, including statements regarding, among other things,
(a) our company's projected sales and profitability, (b) our company's growth
strategies, (c) our company's future financing plans and (d) our company's
anticipated needs for working capital. In addition, when used in this filing,
the words "believes," "anticipates," "intends," "in anticipation of," "expects,"
and similar words are intended to identify forward-looking statements. These
forward-looking statements are based largely on our company's expectations and
are subject to a number of risks and uncertainties, many of which are beyond our
company's control. Actual results could differ materially from these
forward-looking statements as a result of changes in trends in the economy and
our company's industry, demand for our company's products, unexpected changes in
fashion trends, prior season inventories, competition, reductions in the
availability of financing and availability of raw materials, the seasonal nature
of our company's business, the extremely competitive nature of the golf apparel
and sportswear industries and other factors. In light of these risks and
uncertainties, there can be no assurance that the forward-looking statements
contained in this filing will in fact occur.
OVERVIEW
Currently, Avid has no on-going operations. Avid has been seeking
potential operating businesses and business opportunities, with the intent to
acquire or merge with such businesses. On February 12, 2002, Avid filed with the
Securities and Exchange Commission a Form S-4 Proxy Statement and Registration
Statement in conjunction with United Companies Corporation, a Nevada
corporation, describing a proposed merger of Avid with and into Merger Co., a
wholly-owned subsidiary of United Companies. If the merger is completed, Merger
Co. will be the surviving entity and will assume all of Avid's assets and
liabilities. At the time of the proposed merger, outstanding shares of Avid
common stock will be converted automatically into shares of United Companies
common stock on a fifty (50) for one (1) basis. In management's opinion, the
excess of Avid's liabilities over its assets and the lack of available funding
make any other such acquisition or merger, other than the merger with Merger
Co., unlikely.
Previously, through Avid's wholly-owned subsidiary, it designed,
manufactured and marketed distinctive premium and moderately-priced sportswear.
Avid sold its products primarily through golf pro shops and resorts, corporate
sales accounts and better specialty stores. Until 2001, Avid's sportswear was
marketed under three distinct labels: Avid Sportswear, British Open Collection
and Dockers Golf. From its incorporation on September 19, 1997 until March 1,
1999, Avid had no operations. On March 1, 1999, Avid acquired Avid Sportswear,
Inc., which had been in the business of designing, manufacturing and marketing
golf apparel since October 6, 1988. For accounting purposes, the acquisition was
treated as a purchase of Avid Sportswear, Inc. All of Avid's business operations
had been conducted through Avid Sportswear, Inc.
On January 19, 2001, Avid received a letter from IMG that the Company was
in default of the license with The Championship Committee Merchandising Limited
for failure to pay timely its royalty payments for the second, third and fourth
quarters of 2000 of approximately $94,000. On April 30, 2001, IMG subsequently
terminated this license.
On May 9, 2001, Avid received a letter from Levi Strauss & Co. that,
effective May 9, 2001, it was terminating the Dockers Trademark License
Agreement between Avid's wholly-owned subsidiary, Avid Sportswear, Inc. and Levi
Strauss & Co. as a result of Avid Sportswear, Inc.'s second quality and closeout
or end-of-season sales being greater than 25% of Avid's total product sales
during the Year 2000. Due to the loss of this license, Avid's operating results
for the year ended December 31, 2001 will not be indicative of future results.
Avid believes that the loss of this license will have a material adverse effect
on its results of operations in future periods. As a result of the loss of this
license, Avid has no ongoing operations. This termination is currently the
subject of mediation hearings.
On May 17, 2001, Barnum Mow, the President of Avid Sportswear, Inc.
resigned. In addition, on May 14, 2001, Stephen A. Korn, the Chief Financial
Officer of Avid Sportswear, Inc., was terminated by the Company and, on May 29,
2001, David, Roderick, the Executive Vice-President of Merchandising and Design
of Avid Sportswear, Inc. resigned.
On May 22, 2001, Avid received a letter from GE Capital Commercial
Services, Inc. that, effective May 22, 2001, it was terminating its obligation
to make any further advances to Avid pursuant to the Factoring Agreement between
Avid and GE Capital. In addition, GE Capital declared all of the advances and
other obligations owing by Avid to GE Capital to be immediately due and payable.
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Subsequently, on July 20, 2001, Avid's wholly-owned subsidiary received notice
from GE Capital that the obligations under the Factoring Agreement had been paid
in full. Also, on July 20, 2001, Avid's wholly-owned subsidiary received notice
from the factor that the Company's then-current chairman had no further
obligations as the guarantor of the Factoring Agreement.
In June 2001, Earl Ingarfield resigned as President and Chief Executive
Officer of Avid. Mr. Ingarfield was employed as President and Chief Executive
Officer of Avid pursuant to a three year employment agreement dated February 29,
2000. Mr. Ingarfield had an annual base salary of $325,000, plus annual cost of
living adjustments and other increases to be determined by the Board of
Directors. Except in the event of a change of control or other special
circumstance, Mr. Ingarfield's salary (less employment taxes) was to be paid
quarterly in Avid's stock on the last day of each calendar quarter. In addition,
Mr. Ingarfield was to be entitled to annual incentive bonus compensation in an
amount to be determined by the Board of Directors. Mr. Ingarfield had demand and
piggy-back registration rights with respect to his stock in Avid. Avid's
management believes that Avid does not have a continuing obligation to register
any of Mr. Ingarfield's stock.
On June 25, 2001, Avid hired Frank Jakovac as its new President and Chief
Executive Officer. Also, on July 24, 2001, Avid hired James Handlon as its new
Chief Operating Officer and Michelle Mathis as its new Director of Corporate and
Legal Affairs. Messrs. Jakovac and Handlon and Ms. Mathis were also elected as
members of Avid's Board of Directors.
On July 26, 2001, Avid and its wholly-owned subsidiary were named in
litigation with Mr. Mow. Mr. Mow filed a complaint against Avid and its
wholly-owned subsidiary alleging breach of contract, breach of implied covenant
of good faith and fair dealing and violation of Labor Code ss. 227.3. Mr. Mow
seeks damages in the amount of $444,307.00, prejudgment interest thereon, costs
of suit incurred, and attorney's fees and costs according to statute. Due to the
preliminary status of the lawsuit, it is not possible to evaluate the likelihood
of an unfavorable outcome or estimate of potential loss.
On August 1, 2001, Avid and its wholly-owned subsidiary were named in
litigation with Mr. Korn. Mr. Korn filed a complaint against Avid and its
wholly-owned subsidiary alleging termination in violation of public policy,
breach of written and implied contract, breach of implied covenant of good faith
and fair dealing, intentional interference with contractual relations, negligent
interference with contractual relations, and violations of Labor Code ss.ss. 201
and 227.3. Mr. Korn seeks damages in an amount proven at trial, prejudgment
interest thereon, a penalty in accordance with Labor Code ss. 203, costs of suit
incurred, and attorney's fees and costs according to statute. Due to the
preliminary status of the lawsuit, it is not possible to evaluate the likelihood
of an unfavorable outcome or estimate of potential loss.
On August 16, 2001, Jerry L. Busiere resigned as a director of Avid.
On September 24, 2001, Earl T. Ingarfield resigned as Chairman of the
Board of Directors of Avid.
On September 26, 2001, Avid and its wholly-owned subsidiary were named in
litigation with David Roderick. Mr. Roderick filed a complaint against Avid and
its wholly-owned subsidiary alleging fraud, negligent misrepresentation, unjust
enrichment, and breach of written contract. Mr. Roderick seeks damages in an
amount proven at trial, punitive damages in an amount proven at trial, costs of
suit incurred, and attorney's fees. Due to the preliminary status of the
lawsuit, it is not possible to evaluate the likelihood of an unfavorable outcome
or estimate the extent of potential loss.
As of November 30, 2001, Avid terminated its California office lease
against the terms of the lease agreement and Avid remains liable for all rent
payments up to the contracted termination date of March 2004. Avid has accrued
for all future obligations of $275,654 as of December 31, 2001.
On December 1, 2001, Michael LaValliere resigned as a director of Avid.
Effective December 1, 2001, the employment agreements for Messrs. Jakovac
and Handlon and Ms. Mathis were terminated by the mutual consent of Avid and
each respective individual. Mr. Jakovac continues as an officer and director of
Avid. Handlon and Ms. Mathis continue to remain as directors of Avid.
In 2000, Avid's wholly-owned subsidiary, Avid Sportswear, Inc., entered
into individual Endorsement Agreements, typically for a two-year term, with
individual PGA Tour professionals, whereby the individual was to paid an annual
fixed fee to wear Avid products at golf and golf-related events, and to be
included in advertising and other promotional events, including personal
appearances. The fixed fee for the first year was set forth in the Agreement,
whereas the second year fixed fee was to be determined by that individual's
final ranking on the official PGA Tour Money List at the end of the first year.
The individuals were also to be eligible to earn a bonus for performance on
individual PGA Tour events and at year-end, based upon the individual's final
18
ranking of the official PGA Tour Money List at the end of each contract year.
The fixed fee, bonus incentive, and number of days of personal appearance varied
by individual. Avid terminated all of these endorsement agreements as of
December 31, 2001 and has accrued for all minimum future guaranteed payments, of
$403,061, as of December 31, 2001.
PLAN OF OPERATIONS
Currently, Avid has no on-going operations. Avid has been seeking
potential operating businesses and business opportunities, with the intent to
acquire or merge with such businesses. On February 12, 2002, Avid filed with the
Securities and Exchange commission a Form S-4 Proxy Statement and Registration
Statement in conjunction with United Companies Corporation, a Nevada
corporation, describing a proposed merger of Avid with and into Merger Co., a
wholly-owned subsidiary of United Companies. If the merger is completed, Merger
Co. will be the surviving entity and will assume all of Avid's assets and
liabilities. At the time of the proposed merger, outstanding shares of Avid
common stock will be converted automatically into shares of United Companies
common stock on a fifty (50) for one (1) basis. In management's opinion, the
excess of Avid's liabilities over its assets and the lack of available funding
make any such acquisition or merger other than the merger with Merger Co.
unlikely.
Additional Fund Raising Activities. As of June 30, 2002, Avid had $35,289
cash-on-hand. Avid has historically funded its operations through a combination
of internally generated cash, funds loaned to the Company by certain of its
officers and directors and through the sale of securities. Avid will need to
raise additional funds to execute a new business strategy in the event the
merger with Merger Co. is not successfully consummated. Avid's current
liabilities exceed its current assets as of June 30, 2002.
Summary of Anticipated Product Development. Our company does not have any
available funds for any further product development and is re-evaluating our
product development efforts in light of the termination of the Dockers Golf
label and the British Open Collection label.
Significant Plant and Equipment Purchases. In 2001, Avid did not make any
significant plant and/or equipment purchases. In 2002, Avid does not anticipate
purchasing additional equipment.
Changes in Number of Employees. Avid currently has one (1) employee. Avid
does not anticipate hiring additional personnel during 2002. The Company
believes that its personnel will be adequate to accomplish the tasks set forth
in the plan.
CURRENT
DEPARTMENT EMPLOYEES
------------------------------------------ ---------
Administrative and Other Support Positions 1
---------
Total Employees 1
=========
THREE-MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001
Effective November 30, 2001, Avid ceased all operations relating to the
manufacture and sale of golf apparel and related products. The following results
are not indicative of our future results.
Our results of operations for the three-month periods ended September 30,
2002 and 2001 respectively, included three months of operations of our
wholly-owned subsidiary, Avid Sportswear, Inc. As a result of the termination of
the Dockers Golf license, these results are not indicative of future results.
Sales, net. Sales, net decreased $1.6 million, from $1.6 million to $0 in
the three months ended September 30, 2002 compared to the same period in the
prior year. This decrease was primarily attributable to our reduced sales
subsequent to the termination of the Dockers Golf license on May 9, 2001.
Cost of Goods Sold. Cost of goods sold decreased $1.3 million, from $1.3
million to $0 in the three months ended September 30, 2002 compared to the same
period in the prior year. This decrease was primarily attributable to reduced
sales subsequent to the termination of the Dockers Golf License.
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Gross Profit. Gross profit decreased $0.3 million, from $0.3 million to $0
in the three months ended September 30, 2002, compared to the same period in the
prior year. This decrease was attributable to the decrease in sales, net in the
current period compared to the same period in the prior year.
Selling expenses. Selling expenses decreased $0.05 million, from $0.05
million to $0 in the three months ended September 30, 2002 compared to the same
period in the prior year. This decrease was attributable to our reduced sales
efforts subsequent to the termination of the Dockers Golf license on May 9,
2001.
General and administrative expenses. General and administrative expenses
decreased $2.0 million, or 97.9%, from $2.1 million to $44,961 in the three
months ended September 30, 2002 compared to the same period in the prior year.
This decrease was primarily attributable to reduced operating activities
subsequent to the termination of the Dockers Golf license on May 9, 2001.
Interest expense. Interest expense decreased $60,711, or 80.6%, in the
three-month period ended September 30, 2002, compared to the same period in the
prior year.
Net loss. Net loss decreased $2.7 million, or 97.8%, from $2.7 million to
$59,607 in the three months ended September 30, 2002 compared to the same period
in the prior year. This decrease was primarily attributable to the decrease in
operating expenses subsequent to the termination of the Dockers Golf label on
May 9, 2001. We anticipate that our net loss will increase as a result of the
termination of the Dockers Golf license.
NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001
Our results of operations for the nine-month periods ended September 30,
2002 and 2001, included nine months of operations of our wholly-owned
subsidiary, Avid Sportswear, Inc. As result of the termination of the Dockers
Golf license these results are not indicative of future results.
Sales, net. Sales, net decreased $19.6 million, from $19.6 million to $0
in the nine months ended September 30, 2002 compared to the same period in the
prior year. This decrease is primarily attributable to our reduced sales efforts
subsequent to the termination the Dockers Golf product license on May 9, 2001.
Cost of Goods Sold. Cost of goods sold decreased $14.2 million, from $14.2
million to $0 in the nine months ended September 30, 2002 compared to the same
period in the prior year. This decrease was primarily attributable to reduced
sales subsequent to the termination of the Dockers Golf license on May 9, 2001.
Gross Profit. Gross profit decreased $5.4 million, from $5.4 million to $0
in the nine months ended September 30, 2002 compared to the same period in the
prior year. This decrease was primarily attributable to the decrease in sales,
net in the current period compared to the same period in the prior year.
Selling expenses. Selling expenses decreased $1.3 million, from $1.3
million to $0 in the nine months ended September 30, 2002 compared to the same
period in the prior year. This decrease was primarily attributable to our
reduced sales efforts subsequent to the termination of the Dockers Golf license
on May 9, 2001.
General and administrative expenses. General and administrative expenses
decreased $5.2 million, or 90.9%, from $5.7 million to $0.5 million in the nine
months ended September 30, 2002 compared to the same period in the prior year.
This decrease was partially attributable to reduced operating activities
subsequent to the termination of the Dockers Golf license on May 9, 2001.
Interest expense. Interest expense decreased $0.4 million, or 91.4%, in
the nine-month period ended September 30, 2002, compared to the same period in
the prior year.
Net loss. Net loss decreased $4.0 million, or 73.6%, from $5.4 million to
$1.4 million in the nine months ended September 30, 2002, compared to the same
period in the prior year. This decrease was primarily attributable to the
decrease in operating expenses subsequent to the termination of the Dockers Golf
label on May 9, 2001.
In August 2000, we entered into a factoring, letter of credit and
revolving inventory facility. On May 22, 2001, the factor terminated its
obligations to make any further advances to our company under the factoring
agreement and declared all of the advances and obligations owing by our company
to the facto to be immediately due and payable. Subsequently, on July 20, 2001,
20
the company's wholly-owned subsidiary received notice from the factor that the
obligations under the factoring agreement had been paid in full. Also, on July
20, 2001, the company's wholly-owned subsidiary received notice from the factor
that the company's chairman has no further obligations as the guarantor of the
factoring agreement.
As of August 18, 2000, the outstanding balance of the company's loan with
First State Bank, including all collateral security and guarantees associated
therewith, were assigned to Earl T. Ingarfield, Michael LaValliere and Lido
Capital Corporation in consideration of payment in full of all outstanding
indebtedness to First State Bank.
In November 2000, our company raised $300,000 in gross proceeds and
$255,000 in net proceeds from the sale of convertible debentures. See "Item 2.
Changes in Securities and Use of Proceeds."
On November 28, 2000, Avid entered into a Line of Credit with GMF
Holdings, Inc. Pursuant to the Line of Credit, GMF Holdings, Inc. agreed to
acquire up to $10 million of the Company's debentures. The debentures were
convertible into shares of Avid's common stock at a conversion price equal to
80% of the closing bid price on the Over-the-Counter Bulletin Board or other
principal market on which Avid's common stock was traded for the 10 days
immediately following the notice date of conversion. The timing of each sale and
the number of debentures to be sold was at the Company's discretion, subject to
various conditions. Through June 30, 2002, Avid has raised $1.2 million from the
sale of debentures pursuant to the Line of Credit and 59.3 million shares of
Avid's common stock were issued upon conversion of the debentures. As a result
of the loss of the Dockers' license, no additional funds pursuant to the Line of
Credit are available to Avid.
In December 2000, our Company raised $400,000 from the sale of 2,000,000
shares of common stock.
On January 19, 2001, Avid received a letter form IMG that Avid was in
default of the license with The Championship Committee Merchandising Limited for
failure to pay timely our royalty payments for the second, third and fourth
quarters of 2000 of approximately $94,000. IMG subsequently terminated this
license.
On May 9, 2001, Avid received a letter from Levi Strauss & Co. that,
effective May 9, 2001, it was terminating the Dockers' Trademark License
Agreement between Avid's wholly-owned subsidiary, Avid Sportswear, Inc. and Levi
Strauss & Co. as a result of Avid Sportswear, Inc.'s second quality and closeout
or end of season sales being greater than 25% of the Company's total product
sales during the year 2000.
CONTINGENT LIABILITIES
Avid's new management believes that the Company issued shares of common
stock without legends restricting the resale of such shares. The Company's new
management believes that at least 19,225,000 shares of common stock have been
resold in the public market in violation of Section 5 of the 1933 Act.
Accordingly, additional shares may have been resold in violation of Section 5 of
the 1933 Act. Avid may be liable for rescission and other damages with respect
to these sales.
Avid's new management believes that the Company may be liable for unpaid
compensation to Mr. Earl Ingarfield pursuant to the Employment Agreement dated
February 29, 2000 between Avid and Mr. Ingarfield.
On May 17, 2001, Barnum Mow resigned as President of our wholly-owned
subsidiary, Avid Sportswear, Inc. On April 24, 2001, Mr. Mow resigned as a
director of our company and as a director of Avid Sportswear, Inc. The
operations of our company largely depended on the efforts and abilities of Mr.
Mow. On July 26, 2001, Mr. Mow filed a complaint against our company and our
wholly-owned subsidiary alleging breach of contract, breach of implied covenant
of good faith and fair dealing, and violation of California Labor Code ss.
227.3. Due to the preliminary status of the lawsuit, it is not possible to
evaluate the likelihood of an unfavorable outcome or estimate the extent of
potential loss.
On August 1, 2001, Avid and its wholly-owned subsidiary were named in
litigation with Mr. Korn. Mr. Korn filed a complaint against Avid and its
wholly-owned subsidiary alleging termination in violation of public policy,
breach of written and implied contract, breach of implied covenant of good faith
and fair dealing, intentional interference with contractual relations, negligent
interference with contractual relations, and violations of Labor Code ss.ss. 201
and 227.3. Mr. Korn seeks damages in an amount proven at trial, prejudgment
interest thereon, a penalty in accordance with Labor Code ss. 203, costs of suit
incurred, and attorney's fees and costs according to statute. Due to the
preliminary status of the lawsuit, it is not possible to evaluate the likelihood
of an unfavorable outcome or estimate of potential loss.
On September 26, 2001, Avid and its wholly-owned subsidiary were named in
litigation with David Roderick. Mr. Roderick filed a complaint against Avid and
its wholly-owned subsidiary alleging fraud, negligent misrepresentation, unjust
21
enrichment, and breach of written contract. Mr. Roderick seeks damages in an
amount proven at trial, punitive damages in an amount proven at trial, costs of
suit incurred, and attorney's fees. Due to the preliminary status of the
lawsuit, it is not possible to evaluate the likelihood of an unfavorable outcome
or estimate the extent of potential loss.
In 2000, Avid's wholly-owned subsidiary, Avid Sportswear, Inc., entered
into individual Endorsement Agreements, typically for a two-year term, with
individual PGA Tour professionals, whereby the individual was to paid an annual
fixed fee to wear Avid products at golf and golf-related events, and to be
included in advertising and other promotional events, including personal
appearances. The fixed fee for the first year was set forth in the Agreement,
whereas the second year fixed fee was to be determined by that individual's
final ranking on the official PGA Tour Money List at the end of the first year.
The individuals were also to be eligible to earn a bonus for performance on
individual PGA Tour events and at year-end, based upon the individual's final
ranking of the official PGA Tour Money List at the end of each contract year.
The fixed fee, bonus incentive, and number of days of personal appearance varied
by individual. Avid terminated all of these endorsement agreements as of
December 31, 2001 and has accrued for all minimum future guaranteed payments, of
$403,061, as of December 31, 2001.
CERTAIN BUSINESS RISKS
AVID IS SUBJECT TO VARIOUS RISKS WHICH MAY MATERIALLY HARM ITS BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. YOU SHOULD CAREFULLY CONSIDER THE
RISKS AND UNCERTAINTIES DESCRIBED BELOW AND THE OTHER INFORMATION IN THIS FILING
BEFORE DECIDING TO PURCHASE AVID'S COMMON STOCK. THESE ARE NOT THE ONLY RISKS
AND UNCERTAINTIES THAT THE COMPANY FACES. IF ANY OF THESE RISKS OR UNCERTAINTIES
ACTUALLY OCCUR, AVID'S BUSINESS, FINANCIAL CONDITION OR OPERATING RESULTS COULD
BE MATERIALLY HARMED. IN THAT CASE, THE TRADING PRICE OF AVID'S COMMON STOCK
COULD DECLINE AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT.
FINANCIAL PERFORMANCE
Avid has historically lost money. For the year ended December 31, 2001,
Avid sustained losses of $6.2 million. For the year ended December 31, 2000,
Avid sustained losses of $8.7 million. The Company's independent auditors have
noted that Avid does not have significant cash or other material assets to cover
its operating costs and to continue as a going concern. Accordingly, Avid will
experience significant liquidity and cash flow problems if it is not able to
raise additional capital as needed and on acceptable terms.
OUR DOCKERS' TRADEMARK LICENSE HAS BEEN TERMINATED BY LEVI STRAUSS & Co.
On May 9, 2001, Avid received a letter from Levi Strauss & Co. that,
effective May 9, 2001, it was terminating the Dockers' Trademark License
Agreement between Avid's wholly-owned subsidiary, Avid Sportswear, Inc., and
Levi Strauss & Co. as a result of Avid Sportswear, Inc.'s second quality and
closeout or end-of-season sales being greater than 25% of Avid's total product
sales during Year 2000. Avid believes that the loss of the license will have a
material adverse effect on our results of operations in future periods. The loss
of this license will result in lower Company sales and a higher net loss in
future periods. This termination is currently the subject of mediation hearings.
AVID CURRENTLY HAS NO OPERATIONS
Effective November 30, 2001, Avid ceased all operations relating to the
manufacture and sale of golf apparel and related products. As a result of the
discontinuation of operations, Avid defaulted on all three of its capital
leases. All of the leased assets were repossessed and then resold by the leasing
companies. Avid then sold all of its remaining fixed assets. Avid has been
seeking potential operating businesses and business opportunities to merge with
or acquire. On February 12, 2002, Avid filed with the Securities and Exchange
Commission a From S-4 Proxy Statement and Registration Statement in conjunction
with United Companies Corporation, describing a proposed merger of Avid with and
into Merger Co., a wholly-owned subsidiary of United Companies. The excess of
Avid's liabilities over its assets and the lack of available funding make any
other such acquisition or merger, other than the merger with Merger Co.,
unlikely. Even in the event the proposed merger is successfully consummated, no
assurance can be given that Avid will be successful in reaching or maintaining
profitable operations.
AVID HAS HISTORICALLY LOST MONEY AND LOSSES MAY CONTINUE IN THE FUTURE
Avid has historically lost money. In the nine months ended September 30,
2002, Avid sustained a loss of $1.4 million. In the year ended December 31,
2001, Avid sustained a loss of $6.2 million. In the year ended December 31,
2000, Avid sustained losses of $8.7 million. Avid currently does not have any
operations. Future losses are likely to occur. For the years ended December 31,
22
2001 and 2000, Avid's independent auditors have noted that Avid does not have
significant cash or other material assets to cover its operating costs and to
allow it to continue as a going concern. As of September 30, 2002, Avid's
current liabilities exceeded its current assets. Avid's ability to obtain
additional funding will determine its ability to continue as a going concern. As
of September 30, 2002, Avid had $15,381 cash-on-hand. Accordingly, Avid will
experience significant liquidity and cash flow problems if it is not able to
raise additional capital as needed and on acceptable terms. No assurances can be
given that Avid will be successful in reaching or maintaining profitable
operations.
AVID WILL NEED TO RAISE ADDITIONAL CAPITAL TO EXECUTE A NEW
BUSINESS STRATEGY
Avid has relied on significant external financing to fund its operations.
Such financing has historically come from a combination of borrowings and sale
of common stock from third parties and funds provided by certain officers and
directors. Avid will need to raise additional capital to execute a new business
strategy. Among other things, external financing will be required to cover its
operating costs. Avid cannot assure you that financing whether from external
sources or related parties will be available if needed or on favorable terms. In
management's opinion, Avid will be unsuccessful in raising additional capital
without changing its capital structure.
AVID DOES NOT HAVE AUTHORIZED COMMON STOCK AVAILABLE TO RAISE CAPITAL
Avid does not have any authorized common stock available to raise capital.
The sale of Avid's common stock to raise capital may cause dilution to its
existing shareholders. Avid's inability to obtain adequate financing will result
in the need to curtail business operations. Any of these events would be
materially harmful to Avid's business and may result in a lower stock price.
CONTINGENT LIABILITIES
Avid's new management believes that the Company issued shares of common
stock without legends restricting the resale of such shares. Avid's new
management believes that at least 19,225,000 shares of common stock have been
resold in the public market in violation of Section 5 of the 1933 Act.
Accordingly, additional shares may have been resold in violation of Section 5 of
the 1933 Act. Avid may be liable for rescission and other damages with respect
to these sales.
AVID COULD FAIL TO ATTRACT OR RETAIN KEY PERSONNEL
Avid's success largely depends on the efforts and abilities of Frank
Jakovac, Avid's President and Chief Executive Officer and a Director. The loss
of the services of Mr. Jakovac could materially harm Avid's business because of
the cost and time necessary to replace and train such personnel. Such a loss
would also divert management attention away from operational issues. Avid was
unable to honor its obligations Mr. Jakovac's employment agreement and, as a
result, Avid and Mr. Jakovac mutually agreed to terminate his employment
agreement effective December 1, 2001. Currently, Avid does not have an
employment agreement with Mr. Jakovac. Avid does not maintain a key-man life
insurance policy on Mr. Jakovac. Effective December 1, 2001, Avid and Mr. James
Handlon and Ms. Michelle Mathis agreed to terminate their respective employment
agreements with Avid, as the Company was unable to honor its obligations under
these employment agreements. On May 17, 2001, Barnum Mow, the President of Avid
Sportswear, Inc., resigned. On August 16, 2001, Jerry Busiere resigned as
Secretary, Treasurer and a Director of Avid. On September 24, 2001, Earl T.
Ingarfield resigned as Chairman and a Director of Avid. On December 1, 2001,
Michael LaValliere resigned as a Director of Avid.
AVID HAS BEEN THE SUBJECT OF A GOING CONCERN OPINION
FROM OUR INDEPENDENT AUDITOR
Avid's independent auditors have added an explanatory paragraph to their
audit opinions issued in connection with the 2001 and 2000 financial statements,
which states that Avid does not have significant cash or other material assets
to cover its operating costs and to allow it to continue as a going concern. In
addition, Avid's independent auditors have noted that Avid reentered the
development stage effective January 1, 2002. Avid's ability to obtain additional
funding will determine its ability to continue as a going concern. Avid's
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
AVID HAS BEEN AND CONTINUES TO BE SUBJECT TO A WORKING CAPITAL
DEFICIT AND ACCUMULATED DEFICIT
Avid had a working capital deficit of $4.9 million at September 30, 2002.
Avid had a working capital deficit of $3.7 million and $3.0 million at December
31, 2001 and 2000, respectively. Avid had a accumulated deficit of $21.8 million
23
at September 30, 2002. Avid had an accumulated deficit of $20.4 million and
$14.2 million at December 31, 2001 and 2000, respectively. Avid currently does
not have any operations.
AVID'S COMMON STOCK MAY FLUCTUATE SIGNIFICANTLY
Avid's common stock has experienced, and is likely to experience in the
future, significant price and volume fluctuations, which could adversely affect
the market price of its common stock. In addition, Avid's management believes
that factors such as changes in the overall economy or the condition of the
financial markets could cause the price of its common stock to fluctuate
substantially.
AVID COMMON STOCK IS A "PENNY STOCK"
Avid common stock is a "penny stock" as that term is defined in Rule
3a51-1 promulgated under the Securities Exchange Act of 1934. Penny stocks are
stock:
o With a price of less than $5.00 per share;
o That are not traded on a "recognized" national exchange;
o Whose prices are not quoted on the Nasdaq automated quotation system
(Nasdaq listed stock must still have a price of not less than $5.00 per
share); or
o In issuers with net tangible assets less than $2.0 million (if the
issuer has been in continuous operation for at least three years) or
$5.0 million (if in continuous operation for less than three years), or
with average revenues of less than $6.0 million for the last three
years.
Broker/dealers dealing in penny stocks are required to provide potential
investors with a document disclosing the risks of penny stocks. Moreover,
broker/dealers are required to determine whether an investment in a penny stock
is a suitable investment for a prospective investor. These requirements may
reduce the potential market for Avid common stock by reducing the number of
potential investors. This may make it more difficult for investors in Avid
common stock to resell shares to third parties or to otherwise dispose of them.
This could cause Avid's stock price to decline.
AVID COMMON STOCK MAY BE AFFECTED BY LIMITED TRADING VOLUME AND
MAY FLUCTUATE SIGNIFICANTLY
Historically, there has been a limited public market for Avid's common
stock and there can be no assurance that an active trading market for Avid's
common stock will develop. As a result, this could adversely affect
shareholders' ability to sell Avid's common stock in short time periods, or
possibly at all. Avid's common stock has experienced, and is likely to
experience in the future, significant price and volume fluctuations, which could
adversely affect the market price of its common stock.
ITEM 3. CONTROLS AND PROCEDURES
-----------------------
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Within the 90 days prior to the filing date of this report, Avid carried
out an evaluation of the effectiveness of the design and operation of its
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. This
evaluation was done under the supervision and with the participation of the
Company's President and Chief Executive Officer. Based upon that evaluation, he
concluded that disclosure controls and procedures are effective in gathering,
analyzing and disclosing information needed to satisfy Avid's disclosure
obligations under the Securities Exchange Act of 1934.
CHANGES IN INTERNAL CONTROLS
There were no significant changes in Avid's internal controls or in other
factors that could significantly affect those controls since the most recent
evaluation of such controls.
24
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
-----------------
On July 26, 2001, Avid and its wholly-owned subsidiary were named in
litigation with Barnum Mow, former Chief Executive Officer of the wholly-owned
subsidiary. Mr. Mow filed a complaint against Avid and its wholly-owned
subsidiary alleging breach of contract, breach of implied covenant of good faith
and fair dealing, and violation of Labor Code ss.ss. 227.3. Mr. Mow seeks
damages in the amount of 444,307.00, prejudgment interest thereon, costs of suit
incurred, and attorney's fees and costs according to statute. Due to the
preliminary status of the lawsuit, it is not possible to evaluate the likelihood
of an unfavorable outcome or estimate of potential loss.
On August 1, 2001, Avid and its wholly-owned subsidiary were named in
litigation with Stephen A. Korn, former CFO of the wholly-owned subsidiary. Mr.
Korn filed a complaint against Avid and its wholly-owned subsidiary alleging
termination in violation of public policy, breach of written and implied
contract, breach of implied covenant of good faith and fair dealing, intentional
interference with contractual relations, negligent interference with contractual
relations, and violation of Labor Code ss.ss. 201 & 227.3. Mr. Korn seeks
damages in an amount proven at trial, prejudgment interest thereon, a penalty in
accordance with Labor Code ss.203, costs of suit incurred, and attorney's fees
and costs according to statute. Due to the preliminary status of the lawsuit, it
is not possible to evaluate the likelihood of an unfavorable outcome or estimate
the extent of potential loss.
On September 26, 2001, Avid and its wholly-owned subsidiary were named in
litigation with David Roderick, former Executive Vice President of Merchandising
and Design of the wholly-owned subsidiary. Mr. Roderick filed a complaint
against Avid and its wholly-owned subsidiary alleging fraud, negligent
misrepresentation, unjust enrichment, and breach of written contract. Mr.
Roderick seeks damages in an amount proven at trial, punitive damages in an
amount proven at trial, costs of suit incurred, and attorney's fees. Due to the
preliminary status of the lawsuit, it is not possible to evaluate the likelihood
of an unfavorable outcome or estimate the extent of potential loss.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
-----------------------------------------
(a), (b) and (d) None.
(c) Sales of Unregistered Securities.
On November 28, 2000, Avid entered into a Line of Credit with GMF
Holdings, Inc. Pursuant to the Line of Credit, GMF Holdings, Inc. agreed to
acquire up to $10 million of the Company's debentures. The debentures are
convertible into shares of Avid's common stock at a conversion price equal to
80% of the closing bid price on the Over-the-Counter Bulletin Board or other
principal market on which Avid's common stock is traded for the 10 days
immediately following the notice date of conversion. The timing of each sale and
the number of debentures to be sold is at the Company's discretion, subject to
various conditions, including an effective registration of the conversion
shares. The dollar amount that Avid can request under any individual sale is
subject to the average trading volume of Avid's common stock for the preceding
40-day trading period. The maximum term of the Line of Credit is 30 months from
the date of the agreement. The agreement contains various representations,
warranties and covenants by Avid, including limitations on the Company's ability
to sell common stock or common stock equivalents, sell assets, merge, or enter
into certain other transactions. Pursuant to the terms of the Line of Credit,
the Company registered 55,500,000 shares of Avid's common stock to be issued
upon conversion of convertible debentures sold in connection with such Line of
Credit.
From January 10, 2001 to June 19, 2001, Avid converted $1,174,000 of debt
into 64,292,260 shares of common stock. Avid recognized additional interest
expense of $293,501, related to the beneficial conversion feature of the
debentures pursuant to EITF 98-5.
From February 12, 2001 to June 19, 2001, Avid converted $16,566 of
interest related to convertible debentures into 950,157 shares of common stock
at an average price per share of $0.02.
25
From January 30, 2001 to February 19, 2001, Avid converted $948,530 of
related debt and interest of $137,131 into 14,236,486 shares of common stock at
an average price per share of $0.08.
During the year ended December 31, 2001, Avid issued 16,500,000 shares of
common stock in exchange for $691,000 of common stock subscriptions receivable.
Of this amount, Avid collected $228,300. Avid wrote-off $1,404,700, including
the remaining portion of the 2001 subscriptions, as uncollectible.
During the year ended December 31, 2001, Avid issued 6,725,000 shares of
common stock to employees and consultants for services rendered at an average
price per share of $0.01.
In May 2002, Avid sold 5,000 shares of Series A Convertible Preferred
Stock at $4.00 per share for an aggregate of $20,000.
With respect to the sale of unregistered securities referenced above, and
except for the 19,225,000 shares of common stock that the Company's new
management believes were issued without approval of the board of directors and
without appropriate restrictive legends, all transactions were exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933 (the "1933
Act"), and Regulation D promulgated under the 1933 Act. In each instance, the
purchaser had access to sufficient information regarding our company so as to
make an informed investment decision. More specifically, GMF Holdings, Inc.
signed a written subscription agreement with respect to its financial status and
investment sophistication in which it represented and warranted, among other
things, that it had:
o the ability to bear the economic risks of an investment in the shares
of common stock of our company;
o a certain net worth sufficient to meet the suitability standards of
our company; and
o been provided with all material information requested by the purchaser
or its representatives, and been provided an opportunity to ask
questions of and receive answers from our company concerning our
company and the terms of the offering.
CONTINGENT LIABILITIES
The company's new management believes that the company issued shares of
common stock without legends restricting the resale of such shares. The
company's new management believes that at least 19,225,000 shares of common
stock have been resold in the public market in violation of Section 5 of the
1933 Act. Accordingly, additional shares may have been resold in violation of
Section 5 of the 1933 Act. The company may be liable for rescission and other
damages with respect to these sales.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
--------------------------------
On May 22, 2001, we received a letter from GE Capital Commercial Services,
Inc. that, effective May 22, 2001, it was terminating its obligation to make any
further advances to our company pursuant to the Factoring Agreement between our
company and GE Capital Commercial Services, Inc. In addition, GE Capital
Commercial Services, Inc. declared all of the advances and other obligations
owing by our company to GE Capital Commercial Services, Inc. to be immediately
due and payable. Subsequently, on July 20, 2001, the company's wholly-owned
subsidiary received notice from the factor that the obligations under the
factoring agreement had been paid in full. Also, on July 20, 2001, the company's
wholly-owned subsidiary received notice from the factor that the company's
chairman has no further obligations as the guarantor of the factoring agreement.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
---------------------------------------------------
None.
ITEM 5. OTHER INFORMATION.
-----------------
Not applicable.
26
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
---------------------------------
(a) EXHIBITS.
--------
EXHIBIT
NO. DESCRIPTION LOCATION
--- ----------- ---------
2.01 Stock Purchase and Sale Incorporated by reference to
Agreement dated as of December Exhibit 2.01 to the Registrant's
18, 1998 among our company, Avid Registration Statement on Form
Sportswear, Inc. and the 10-SB (the "Registration
shareholders of Avid Sportswear, Statement")
Inc.
2.02 Merger Agreement, dated June 18, Incorporated by reference to
2002 by and among United Exhibit 2.02 to Avid Sportswear &
Companies Corporation, Merger Golf Corp.'s Amendment No. 1 to
Co., Inc. and Avid Sportswear & Form S-4 filed June 24, 2002
Golf Corp.
2.03 Articles of Merger of Avid Incorporated by reference to
Sportswear & Golf Corp. with and Exhibit 2.03 to Avid Sportswear &
into Merger Co., Inc. Golf Corp.'s Amendment No. 1 to
Form S-4 filed June 24, 2002
3.01 Articles of Incorporation filed Incorporated by reference to
on September 19, 1997 with the Exhibit 3.01 to the Registration
Nevada Secretary of State Statement
3.02 Amended Articles of Incorporated by reference to
Incorporation filed on May 12, Exhibit 3.02 to the Registration
1999 with the Nevada Secretary Statement
of State
3.03 Certificate of Amendment to Incorporated by reference to
Articles of Incorporation filed Exhibit 3.03 to the Registration
on May 27, 1999 with the Nevada Statement
Secretary of State
3.04 Bylaws Incorporated by reference to
Exhibit 3.04 to the Registration
Statement
4.01 2000 Stock Incentive Plan Incorporated by reference to
Exhibit 4.01 to Amendment No. 2 to
the Registration Statement.
10.01 Agreement dated as of December Incorporated by reference to
8, 1998 between the Championship Exhibit 10.01 to the Registration
Committee Merchandising Limited Statement
and Avid Sportswear Inc.
10.02 Lease dated as of March 1, 1999 Incorporated by reference to
between F & B Industrial Exhibit 10.02 to the Registration
Investments, LLC and Avid Statement
Sportswear, Inc.
10.03 Lease dated as of April 30, 1999 Incorporated by reference to
between Links Associates, Ltd. Exhibit 10.03 to the Registration
and our company Statement
10.04 Employment Agreement dated as of Incorporated by reference to
September 11, 1999 between Exhibit 10.04 to the Registration
Barnum Mow and Avid Sportswear, Statement
Inc.
10.05 Trademark License Agreement Incorporated by reference to
dated as of May 10, 1999 between Exhibit 10.05 to Amendment No. 2 to
Levi Strauss & Co. and Avid the Registration Statement
Sportswear, Inc.
10.06 Employment Agreement dated as of Incorporated by reference to
January 1, 1999 between David E. Exhibit 10.06 to the Registration
Roderick and Avid Sportswear, Statement
Inc.
10.07 Promissory Note in the original Incorporated by reference to
principal amount of $180,000 Exhibit 10.07 to the Registration
dated as of June 4, 1999 from Statement
our company to First State Bank
27
EXHIBIT
NO. DESCRIPTION LOCATION
--- ----------- ---------
10.08 Commercial Security Agreement Incorporated by reference to
dated as of November 17, 1999 Exhibit 10.08 to the Registration
between First State Bank and our Statement
company
10.09 Promissory Note dated as of Incorporated by reference to
November 17, 1999 in the Exhibit 10.09 to the Registration
original principal amount of Statement
$1,000,000 given by our company
to First State Bank
10.10 Business Loan Agreement dated as Incorporated by reference to
of November 17, 1999 between Exhibit 10.10 to the Registration
First State Bank and our company Statement
10.11 Convertible Revolving Demand Incorporated by reference to
Note dated as of December 1, Exhibit 10.11 to Amendment No. 2 to
1999 in the original principal the Registration Statement
amount of $550,000 given by our
company to Earl Ingarfield
10.12 Convertible Revolving Demand Incorporated by reference to
Note dated as of December 1, Exhibit 10.12 to Amendment No. 2 to
1999 in the original principal the Registration Statement
amount of $1,000,000 given by
our company to Lido Capital
Corporation
10.13 Convertible Revolving Demand Incorporated by reference to
Note dated as of December 1, Exhibit 10.13 to Amendment No. 2 to
1999 in the original principal the Registration Statement
amount of $125,000 given by our
company to Michael E. LaValliere
10.14 Convertible Revolving Demand Incorporated by reference to
Note dated as of December 1, Exhibit 10.14 to Amendment No. 2 to
1999 in the original principal the Registration Statement
amount of $500,000 given by our
company to Thomas Browning
10.15 Revolving Demand Note dated as Incorporated by reference to
of December 1, 1999 in the Exhibit 10.15 to Amendment No. 2 to
original principal amount of the Registration Statement
$200,000 given by our company to
Daniel Paetz
10.16 Executive Employment Agreement Incorporated by reference to
effective as of February 1, 2000 Exhibit 10.16 to Amendment No. 2 to
between our company and Earl T. the Registration Statement
Ingarfield
10.17 Consulting Agreement dated as of Incorporated by reference to
June 22, 2000 between Persia Exhibit 10.17 to the Registrant's
Consulting Group, Inc. and our Registration Statement on Form SB-2
company
10.18 Form of Factoring Agreement Incorporated by reference to
between our company and GE Exhibit 10.18 to the Registrant's
Capital Commercial Services, Form 10-QSB filed on November 17,
Inc. 2001
10.19 Form of Factoring Agreement Incorporated by reference to
Guaranty/Letter of Credit Exhibit 10.19 to the Registrant's
Supplement between our company Form 10-QSB filed on November 17,
and GE Capital Commercial 2001
Services, Inc.
10.20 Form of Factoring Agreement - Incorporated by reference to
Inventory Supplement (with Exhibit 10.20 to the Registrant's
advances) between our company Form 10-QSB filed on November 17,
and GE Capital Commercial 2001
Services, Inc.
10.21 Form of Letter of Agreement Incorporated by reference to
between our company and GE Exhibit 10.21 to the Registrant's
Capital Commercial Services, Form 10-QSB filed on November 17,
Inc. 2001
28
EXHIBIT
NO. DESCRIPTION LOCATION
--- ----------- ---------
10.22 Form of Convertible Debenture Incorporated by reference to
Exhibit 10.22 to the Registrant's
Form 10-QSB filed on November 17,
2001
10.23 Form of Registration Rights Incorporated by reference to
Agreement between our company Exhibit 10.23 to the Registrant's
and purchasers of convertible Form 10-QSB filed on November 17,
debentures 2001
10.24 Line of Credit Agreement dated Incorporated by reference to
as of November 28, 2000 between Appendix "A" to the Registrant's
our company and GMF Holdings, Proxy Statement (the "Proxy
Inc. Statement")
10.25 Form of Debenture dated as of Incorporated by reference to
November 28, 2000 given by our Appendix "B" to the Registrant's
company Proxy Statement
10.26 Registration Rights Agreement Incorporated by reference to
dated as of November 28, 2000 Appendix "C" to the Registrant's
between our company and GMF Proxy Statement
Holdings, Inc.
10.27 Form of Warrant dated as of Incorporated by reference to
November 28, 2000 given by our Appendix "D" to the Registrant's
company Proxy Statement
10.28 Registration Rights Agreement Incorporated by reference to
dated as of November 28, 2000 Appendix "E" to the Registrant's
between our company and the May Proxy Statement
Davis Group, Inc.
10.29 Placement Agent Agreement as of Incorporated by reference to
November 28, 2000 between our Appendix "F" to the Registrant's
company and the May Davis Group, Proxy Statement
Inc.
10.30 Escrow Agreement dated as of Incorporated by reference to
November 28, 2000 among our Appendix "G" to the Registrant's
company, the May Davis Group, Proxy Statement
Inc. and First Union National
Bank
10.31 Amendment to Employment Incorporated by reference to
Agreement effective January 31, Exhibit 10.31 to the Registrant's
2001 between our company and Form 10-QSB filed on November 17,
Barnum Mow 2001
10.32 Forbearance Agreement as of Incorporated by reference to
February 16, 2001 between our Exhibit 10.32 to the Registrant's
company and GE Capital Form 10-QSB filed on November 17,
Commercial Services, Inc. 2001
10.33 Employment Agreement dated as of Incorporated by reference to
June 25, 2001 between Frank Exhibit 10.33 to the Registrant's
Jakovac and our company Form 10-QSB filed on September 21,
2001
10.34 Employment Agreement dated as of Incorporated by reference to
June 25, 2001 between James Exhibit 10.34 to the Registrant's
Handlon and our company Form 10-QSB filed on September 21,
2001
10.35 Employment Agreement dated as of Incorporated by reference to
June 25, 2001 between Michelle Exhibit 10.35 to the Registrant's
Mathis and our company Form 10-QSB filed on September 21,
2001 11.01 Statement re:
Computation of Earnings Not
Applicable
29
EXHIBIT
NO. DESCRIPTION LOCATION
--- ----------- ---------
15.01 Letter on unaudited interim Not Applicable
financial information
16.01 Letter on Change in Certifying Not Applicable
Accountant
20.01 Letter dated May 9, 2001 from Incorporated by reference to
Levi Strauss & Co. Exhibit 20.01 to the Registrant's
Form 8-K filed May 18, 2001
21.01 Subsidiaries of our company Incorporated by reference to
Exhibit 21.01 to the Registration
Statement
23.01 Consent of Independent Not Applicable
Accountants
24.01 Power of Attorney Not Applicable
27.01 Financial Data Schedule Not Applicable
(b) Reports On Form 8-K.
None.
30
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: December 10, 2002 AVID SPORTSWEAR & GOLF CORP.
By:/s/ Frank Jakovac
--------------------------------------
Frank Jakovac
President and Chief Executive Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Avid Sportswear & Golf Corp. (the
"Company") on Form 10-QSB for the period ended June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), each of
the undersigned, in the capacities and on the dates indicated below, hereby
certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that to his knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operation of the Company.
/s/ Frank Jakovac
- -------------------------------------
Frank Jakovac
President, Chief Executive Officer
and Principal Accounting officer
31
CERTIFICATION BY PRINCIPAL EXECUTIVE OFFICER
I, Frank Jakovac, the President and Chief Executive Officer of Avid
Sportswear & Golf Corp., a Nevada corporation (the "Registrant"), certify that:
I have reviewed this quarterly report on Form 10-QSB for the fiscal
quarter ended September 30, 2002, of the Registrant (the "Report").
Based on my knowledge, the Report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by the Report.
Based on my knowledge, the financial statements, and other financial
information included in the Report, fairly present in all material respects the
financial condition, results of operations and cash flows of the Registrant as
of, and for, the periods presented in the Report.
The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which the Report is being prepared.
b) evaluated the effectiveness of the Registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of the Report
(the "Evaluation Date"); and
c) presented in the Report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
The Registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the Registrant's auditors and the Audit Committee
of the Registrant's Board of Directors:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to record,
process, summarize and report financial data and have identified for the
Registrant" auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal control.
The Registrant's other certifying officers and I have indicated in the
Report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
/s/ Frank Jakovac
_____________________________________
Name:
Title: President, Chief Executive Officer
and Principal Accounting Officer
32